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Mortgage-industry execs are welcoming a decision by the Department of Housing and Urban Development to shelve proposed market reforms for the consumer-mortgage process. The HUD changes would have encouraged mortgage lenders to disclose more fully the final costs of closing fees such as title insurance and appraisal. Critics say the mortgage industry is working on technology solutions to achieve the same goals as the HUD reforms, e.g., timelier and less-costly closings.
Elizabeth Green, CIO at Paragon Financial Corp., a specialty mortgage banker focused on the subprime lending market, says the industry is moving toward a fully electronic closing process.
For example, eLynx Ltd. offers uSign, an electronic document-delivery system that lets consumers review and digitally sign loan documents securely via the Internet. Principal Residential Mortgage Inc. licensed uSign earlier this month and plans to put it into operation later this year. The system complies with the Electronic Signatures in Global and National Commerce Act and the Uniform Electronic Transaction Act, laws that recognize the validity of electronic documents in legal proceedings.
Celent Communications analyst Christine Barry says that "by deploying next-generation technology, the mortgage industry can benefit even more than it could under the proposed [HUD] regulations."
Still, barriers to full electronic closing exist; most municipalities aren't equipped to electronically record deeds. Says Green, "Until the document is recorded in the public record, it's an unenforceable transaction."